M3 Insurance has released its Momentum: An M3 Employee Benefits Trend Report, the 2025 edition of its annual employee benefits report.
The report shows that health care costs continue to rise year over year, creating growing pressure for employers and their workforce.
When looking at health care costs based on employer size, increases were largely similar, with one outlier — employers with 100-249 employees received a 9.52% increase on average compared to the other categories:
-
0-99 employees: 8.42%;
Advertisement -
100-249 employees: 9.52%;
-
250-499 employees: 8.36%; and
-
500+ employees: 8.91%.
Employers are preparing for continued cost acceleration in 2026 and beyond. Key cost drivers for these increases include:
-
Health care inflation, which is outpacing general inflation trends;
-
An aging population with growing care needs;
-
A rise in chronic conditions and behavioral health claims; and
-
Specialty and brand name drugs driving pharmacy spend, particularly categories like GLP-1s, a class of medications used to manage blood sugar levels in people with type 2 diabetes and to treat obesity.
Advertisement
The downstream effects of these pressures show up in the data as:
-
Chronic condition claims (such as diabetes, hypertension and coronary artery disease) become more frequent and expensive;
-
Cancer treatment costs continue to climb due to new therapies and earlier detection;
-
Musculoskeletal surgeries, especially orthopedic procedures, are a growing cost category; and
-
Behavioral health utilization remains elevated, with increased access demands and associated claims spending.
Click here to read the full report.
